STANBIC HOLDINGS PLC FINANCIAL RESULTS PRESENTATION 1H20 17 August 2020 PAGE 1
TABLE OF CONTENTS FINANCIAL RESULTS H120 Section Page 1. Operating environment 3 2. Recap of our strategy 5 3. Measuring our strategic progress 7 4. Financial outcome 17 ❑ Corporate and Investment Banking (CIB) 27 ❑ Personal and Business Banking (PBB) 30 ❑ Wealth 33 ❑ SBG Securities (SBGS) 36 Q & A PAGE 2
ENVIRONMENT 01 OPERATING PAGE 3
COMPLEX OPERATING ENVIRONMENT MACRO-ECONOMIC ENVIRONMENT REGULATORY ENVIRONMENT MARKET THREATS MARKET OPPORTUNITIES Locusts ❑ Directive on fee waivers on ❑ Technological innovations Inflation digital channel transactions ❑ June 2020 4.59% vs. June 2019 5.7% ❑ Diverse economy ❑ New tax measures 91-day T-bill ❑ Government Big 4 ❑ June 2020 6.27% % vs. June ❑ Extension of maximum tenor 2019 7% of Repurchase Agreements Covid-19 (REPOs) from 28 to 91 days USD exchange rate ❑ Reduced Cash Reserve ratio ❑ June 2020 107.8 vs. June (CRR) to 4.25% from 5.25% 2019 102.17 ❑ Cuts in Central Bank Rate Floods Central Bank rate ❑ June 2020 7.0 vs. June 2019 9.0 PAGE 4 Source: UNOCHA and FEWSNET(USAID)
STRATEGY 02 RECAP OF OUR PAGE 5
RECAP OF OUR STRATEGY FINANCIAL RESULTS H120 OUR PURPOSE Kenya is our home, we drive her growth the reason we exist To be the leading financial services organisation in Kenya, delivering exceptional OUR VISION what we aspire to be client experiences and superior value IN EXECUTING OUR STRATEGY OUR KEY FOCUS AREAS ARE WE MEASURE OUR PROGRESS USING FIVE STRATEGIC VALUE DRIVERS Client centricity + + Deliver exceptional client experiences Digitisation Leverage our digital platforms Integration Collaborate to deliver seamless, relevant and holistic solutions SEE = Social, economic and environmental PAGE 6
STRATEGIC PROGRESS 03 MEASURING OUR PAGE 7
MEASURING OUR STRATEGIC PROGRESS CLIENT FOCUS PAGE 8
MEASURING OUR PROGRESS ON CLIENT FOCUS FINANCIAL RESULTS H120 “ Standing strong with our clients in the face of Covid-19 as we deliver on our purpose ” D.A.D.A. 31 st July20 vs Dec19 Over 100% 79.6M disbursed to 1,729 65% 50% Digitized Lending MVP0 Liabilities by customers generating revenue of Dadas Loans to support Dadas KES 79.6M disbursed to 2M Dadas Onboarded 1,729 customers Digitized Customer Onboarding ✓ YTD 94% customers onboarded digitally Self-Pin reset ✓ 91% Mobile Banking 3,309 successful self Penetration ✓ Self- customer resets in 10 Weeks onboarding launched PAGE 9
MEASURING OUR PROGRESS ON CLIENT FOCUS FINANCIAL RESULTS H120 “ Standing strong with our clients in the face of Covid-19 as we deliver on our purpose ” eFFA: Roll out of Online New Insurance Product: Repayment Financial Fitness Education Protector Holidays Academies Best Investment Bank in Kenya Digital Insurance: #GoCashless launch of last respects #StaySafe cover solution PAGE 10
EMPLOYEE MEASURING OUR ENGAGEMENT STRATEGIC PROGRESS PAGE 11
MEASURING OUR PROGRESS ON EMPLOYEE ENGAGEMENT FINANCIAL RESULTS H120 “Keeping our employees safe as we deliver on our purpose” Productivity People Development Journey Connect , wellness and safety sessions Future skills learning Webinars pathway #working from home CE’s Sessions Signature Programs and town halls • Digital Literacy Recruitment, upskilling program via Selection, Onboarding eLearning platforms • Virtual recruitment • Launched DEGREED • Online induction platform • COVID-19 Credit Risk Learning Awareness Pathway Performance COVID-19 safety Talent Management Management & Reward measures; Re-wired Masks, sanitisers, transport, medical cover etc PAGE 12
RISK AND MEASURING OUR STRATEGIC PROGRESS CONDUCT PAGE 13
MEASURING OUR PROGRESS ON RISK AND CONDUCT FINANCIAL RESULTS H120 “D oing the right business the right way, cognisant of increased risks” 8% Restructures 33% 35% 30% 25% KES 38b 20% 51% 13% 42% 15% 11% 11% 9% 7% 10% 5% 5% 3% 1% 5% 1% 1% 1% 0% 0% 0% 0% 0% PBB CIB Wealth Digitization in Assets & Managing costs Sniffer Capability Collections Process PAGE 14
SOCIAL, ECONOMIC & IMPACT(SEE) 04 ENVIRONMENTAL PAGE 15
MEASURING OUR PROGRESS ON SEE FINANCIAL RESULTS H120 “Standing with the community in the face of Covid - 19” 1,000 protective suits, Donated 192 Ventilators to 500 gloves & 5,000 the Ministry of Health in partnership with key partners masks which will be donated through our doctors proposition in partnership with the Kenya Health Federation DADA partnership with the Rotary District 9212 Financial Literacy, delivered 700 mental wellness , Estate sanitation stations in different parts of the country planning SME bootcamp for +500 women Initiative by Stanbic Executives The Executive team gave up 50% of their personal tax rebate to support workers across the bank. To date 200 food parcels have been distributed. This will continue for the rest of the year PAGE 16
DELIVERING (FINANCIAL OUTCOME) 05 SUSTAINABLE RETURNS PAGE 17
IMPACT OF COVID-19 IN THE NUMBERS FINANCIAL RESULTS H120 Market volatility and proactive positioning of the GM book - Margin compression resilient GM performance Increase in credit impairments Reduced costs YoY Slow economic activity Adequate capital and liquidity Positives Challenges Global travel restrictions has resulted in slowdown in trade Lean staff complement finance revenues Reduction in digital Operational preparedness revenue for Covid-19 PAGE 18
SUMMARY PERFORMANCE FINANCIAL RESULTS H120 1H20 1H19 change KES m KES m % KEY TAKEOUTS Net interest income 6,304 6,702 (6) The Group (Kenya Bank, South Sudan Non-interest revenue 4,960 6,135 (19) branch, SBG Securities and Stanbic Insurance Agency Limited) reported a profit Total income 11,264 12,837 (12) after tax of KES 2.6b; Operating expenses (5,151) (6,041) 15 Pre-provision profit 6,113 6,796 (10) ❑ Net interest income reduced by 6% mainly as result of margin Credit impairment charges (1,982) (1,235) (61) compression. This was partly offset by Tax (1,578) (1,498) (5) early repayment of expensive debt resulting in a reduction in interest PAT 2,553 4,063 (37) expense 160,970 161,912 (1) Customer loans ❑ Impact of regulatory changes affecting the level of fees earned Customer deposits 256,682 201,551 27 ❑ Focus on cost management NPL CTI 45.7% ROE 10% CLR 2.5% NIM 4.1% 10.19% ❑ Increased provisioning for non (1H19: 47.1%) (1H19: 1.5%) (1H19: 18%) (1H19: 4.8%) performing loans (1H19: 8.12%) PAGE 19
REVENUE FINANCIAL RESULTS H120 7 000 KES millions 12 000 KES millions 6 000 10 000 5 000 8 000 4 000 Trading and other income Interest income 6 000 3 000 Interest expense Net fees and commissions 4 000 Net interest income 2 000 1 000 2 000 - - 1H20 1H19 1H20 1H19 Net fees and commission income ◼ Net interest income decreased year on year by 6% explained ◼ Decrease in net fees and commission income explained by: by margin compression ❑ Key investment banking deals closed in the first half of 2019 that 1H20 did not recur in 2020 ❑ Decline in electronic banking revenues and slow trade finance Net interest income 44% activity 56% Non-interest revenue Trading revenue ◼ Income from trading was largely flat year on year PAGE 20
CREDIT IMPAIRMENT AND OPERATING EXPENSES FINANCIAL RESULTS H120 KES millions KES millions 7 000 47.5% 2,500 3% 6 000 2.5% 3% 47% 47.0% 2,000 5 000 2% Other operating General debt 46.5% 1,500 expenses 4 000 provision 1.5% Staff costs 2% Specific debt 3 000 provision 46.0% 1,000 CTI CLR 1% 46% 2 000 45.5% 500 1% 1 000 0 0% - 45.0% 1H20 1H19 1H20 1H19 ◼ Impairment charges have increased year on year due to: ◼ Decline in cost to income ratio arising from cost containment measures ❑ Increase in provisions for the non-performing book PAGE 21
SUMMARISED GROUP BALANCE SHEET FINANCIAL RESULTS H120 1H20 1H19 change KES m KES m % Assets Financial investments 84,532 94,099 (10) Loans and advances to banks 74,179 15,172 >100 Loans and advances to customers 160,970 161,912 (1) Other assets 27,893 28,287 (1) Property and equipment 3,654 3,306 11 Intangible assets 10,277 10,534 (2) Total assets 361,505 313,310 15% Liabilities Deposits from banks 30,352 36,433 (17%) Deposits from customers 256,682 201,551 27% Borrowings 5,387 9,185 (41%) Other liabilities 19,745 19,312 2% Equity 49,339 46,829 5% Liabilities and equity 361,505 313,310 15% Contingents 69 671 74,606 (7%) Letters of credit 2 821 2,532 11% Guarantees 66 850 72,074 (7%) PAGE 22
CUSTOMER LOANS AND ADVANCES FINANCIAL RESULTS H120 KES millions Loans and advances by business unit 164 000 100% 161 912 88% 87% 162 000 160 970 84% 1H20 1H19 80% 160 000 Wealth 158 000 60% Wealth 5% 5% 156 000 40% CIB PBB PBB 154 000 CIB 43% 52% 44% 20% 51% 10% 9% 8% 152 000 7% 5% 2% 0% 150 000 1H20 FY19 1H19 1H20 1H19 Stage 1 Stage 2 Stage 3 1H20 Loans and advances by product 1H19 Loans and advances by product 17% 13% Home loans Home loans 10% 8% Overdrafts 8% 67% Overdrafts 10% 67% Vehicle asset finance(VAF) Vehicle asset finance(VAF) Term lending Term lending PAGE 23
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